Lack of cash will cripple firms -- 'Apprentice' star
Motor industry gripped by used-car gridlock
Sunday November 16 2008
THE Apprentice star, Bill Cullen, has said "the worst is yet to come" in terms of the economic crisis, and has also predicted the chronic credit crunch could cripple small businesses in Ireland.
Mr Cullen has warned that the economic forecast for 2009 is bleak unless there is radical intervention by the Government to recapitalise the banks.
In the current issue of Irish Entrepreneur magazine, Mr Cullen said that the exposure of the financial system to inflated property values, bad debts from builders and asset write-downs had yet to impact on the banks' balance sheets and could lead to further consternation in the marketplace.
The motor industry maestro said: "The worst is yet to come regarding liquidity, of course it is. You can't get money off the banks. The banks aren't giving money to anybody that I know of. It's going to take Government intervention to get the banks to give credit and to restore liquidity, they've none."
Mr Cullen said the squeeze had already been put on small businesses and he feared there would be more casualties into the New Year.
"The pressure is on already. The top three to four banks are exposed to €168bn of property loans. By the end of the year they will have to address that and these loans will have to be written down and when they do the shit hits the fan. There is no credit coming from the banks, what we have is gridlock in the financial system," he said. The motoring sector is faring particularly badly and the former Renault Ireland chief believes the outlook is pessimistic.
"Not since the Suez blockade in 1956 have we had a crisis as big as we have now in the motor industry. Back then there was no petrol, you could only get a gallon of petrol a week. Now we also have gridlock in the used-car business. Second-hand cars have been totally and utterly devalued by the CO2 regulations introduced on the 1st of July and that's put the motor industry in crisis on top of the credit crunch."
Mr Cullen predicts in the Survival Issue of Irish Entrepreneur that new-car sales next year will be slashed to about 120,000 -- 50 per cent down on the 2007 figures with serious tax-take implications for the Government.
"The car industry has really got the greatest kick in the goolies it's ever had. There are 70,000 used cars on dealers' lots. We never had this situation before where the value of used cars collapsed from under you. You're going to have more dealers in trouble, particularly with the banking squeeze."
His sentiments are echoed by Irish Entrepreneur publisher and editor, Maree Morrissey: "Informed business interests, captains of industry and experienced entrepreneurs are expecting an even tougher year in 2009. Prolonged lack of liquidity in the financial system will turn this recession into a depression with dire consequences."
Bill Cullen's hard-times analysis is echoed by other entrepreneurs, including Senator Feargal Quinn, Amanda Pratt, Louis Fitzgerald and Louis Copeland in Irish Entrepreneur. They all cite banking liquidity and the credit crunch as the biggest threat and one that requires urgent intervention.
They urge businesses to cut costs, curb credit,and cultivate customer care to survive the recession which they expect to continue into 2010.
- JODY CORCORAN
